NEW YORK--(BUSINESS WIRE)--Fitch Ratings has updated its criteria for analyzing loans securing residential mortgage-backed securities (RMBS) under the ability-to-repay (ATR) and qualified mortgage (QM) standards that the Bureau of Consumer Financial Protection adopted as part of its amendments to Regulation Z under the Truth in Lending Act (the Rule). This criteria report replaces Fitch's March 2015 report of the same name.
The criteria now includes assumptions for analyzing pools backed by lower credit quality borrowers and programs that do not use Appendix Q documentation standards for assessing ATR for self-employed or non-wage earning borrowers.
For lower credit quality borrowers that are identified as higher priced QM or non-QM, Fitch will double the probability of a borrower claim from 50% in judicial states and 25% in non-judicial states to 100% and 50%, respectively. These assumptions may also be applied to loan programs that substantially deviate from Appendix Q but will depend on the materiality of the deviations. This criteria is applicable to Fitch's analysis of all U.S. residential mortgages subject to the Rule, which was instituted for all residential mortgage loans with application dates of Jan. 14, 2014 or later.
The criteria are detailed in the full report, which is available at the above link and should be read in conjunction with Fitch's 'U.S. RMBS Loan Loss Model Criteria,' 'Exposure Draft: U.S. RMBS Loan Loss Model Criteria' and 'U.S. RMBS Master Rating Criteria'.
Additional information is available at 'www.fitchratings.com'.
U.S. RMBS Qualified and Non-Qualified Mortgage Criteria
Counterparty Criteria for Structured Finance and Covered Bonds (pub. 14 May 2014)
Criteria for Rating Caps and Limitations in Global Structured Finance Transactions (pub. 28 May 2014)
Exposure Draft: U.S. RMBS Loan Loss Model Criteria (pub. 08 Feb 2016)
Global Structured Finance Rating Criteria (pub. 06 Jul 2015)
U.S. RMBS Loan Loss Model Criteria (pub. 03 Aug 2015)
U.S. RMBS Master Rating Criteria (pub. 21 Jan 2016)